Dublin, 19 November 2020: New data from the EY European Attractiveness Survey, conducted among across 47 countries in October 2020, reveals Ireland placed 4th in the league table of attractive European locations for FDI in 2021. Survey respondents were asked to select the three European countries they believed will be the most attractive for investment in 2021 with Germany, the UK and France taking the top three spots, followed by Ireland.
The research also revealed shifts in FDI trends and investor sentiment since April 2020:
- Europe’s growing appeal for FDI
More investors now feel that Europe will be a more favourable destination for FDI post-Covid-19 – this view is held by 21% of investors currently versus 8% in April. Furthermore, slightly over half of the respondents (51%) believe that Europe will be equally attractive for investment in a post-Covid-19 world, compared to 43% who held that view in April.
- FDI sentiment becoming more positive
In October, 42% of international executives expected a drop in investment plans in 2020, compared to 66% in April of this year, while 10% (versus 0% in April) of executives now anticipate investments increasing before the end of 2020, and 17% see investments remaining at their current level.
In April, a mere 2% of executives were not planning any changes to their supply chains. In October, we saw this rise sharply to one-third. Mirroring this shift of sentiment, significantly fewer companies are contemplating reshoring or nearshoring (37% from 83% in April). Many multinational companies would prefer to avoid disruptive and costly reorganizations right now. Some may relocate selected critical activities to Europe, mitigating future disruption risks, but it will take time and incentives before this drives mass investments in Europe.
- “Back to business” priorities
Future investment decisions will be less influenced by national stimulus plans alone – 80% of investors considered national recovery plans to be a major factor in April, reducing to 32% in October. Work safety is now a growing priority particularly in sectors where employees’ health is most vulnerable.
The top three trends that investors now expect to accelerate most in the next five years include digital customer access to services (63%); sustainability and climate change activity (60%); technology automation of manufacturing processes (51%). And in consequence of these trends, investors expect that the three main sectors driving business growth in the coming years will be cleantech and renewables (39%), digital (35%), and healthcare and wellbeing (24%).
EY Ireland Partner & Head of FDI Feargal De Freine commented on the findings: “At a time of such global economic uncertainty, it is reassuring to see sustained interest among foreign investors in Ireland as an attractive location for investment over the past six months. Ireland’s position as the fourth most attractive European country for investment in 2021, behind the three powerhouse economies of Germany, the UK, and France, positions us well to compete for growing levels of global FDI as we navigate 2021.
“The appeal of Europe is also growing with 73% of investors now perceiving Europe as an equally or more attractive location for FDI in a post-Covid-19 world compared to before the pandemic. This shift may be attributable in part to the European Commission’s position as a pillar of stability progressing recovery plans in the current volatile global economy.
“Having experienced an extensive global slowdown since the pandemic began, companies in Ireland and across Europe now need to accelerate their transformation as they seek to thrive in an emerging post-COVID-19 world order. This is a time of great flux and adaptation is crucial, from building greater sustainability and social responsibility initiatives to improving customer experiences through improved technologies.”